Tariff Policy - Tariff diplomacy

Under an RTAA bilateral accord with Britain in 1938, the Americans
initially sought to curb the imperial preference system to outsiders but
acquiesced to the maintenance of this discriminatory network. For example,
the United States allowed the British to reduce American apple exports
deemed competitive with dominion produce. The payoff, however, lay in the
political arena. The British, Canadians, and Americans lauded the accord
as representing Anglo-American solidarity in the face of fascism. With the
tensions brought on by the Munich Pact a few months after the trade
agreement, the State Department stressed that a conciliatory tariff policy
was significant for it diplomatic impact.

Tariff reduction agreements appeared in rapid succession as war loomed.
The Roosevelt administration successfully renewed the RTAA in 1937 and
used the law to forge an agreement with Turkey in 1939, the first with a
nation in the Middle East and the twenty-first since the RTAA had become
law five years before. This accord, in which the United States granted an
inordinate number of concessions relative to Turkey's offers,
helped keep the nation out of Nazi Germany's grasp. The State
Department signed bilateral pacts with several Latin American nations to
turn them from German influence, and agreements with Iceland in 1943 kept
that country in the Allied fold. No RTAA agreements were signed with
Russia and China, two of America's closest allies during the war,
providing evidence that Hull was selective in his wielding of the RTAA and
that political partnership was not always conditioned upon economic
cooperation. Yet it was just as evident that signatories stayed friendly
to the United States during the war. Of the twenty-seven RTAA nations,
only Finland fought an Allied power. (And for good reason: It had been
invaded by the Soviet Union.) Sixteen countries sided with the United
States, six had broken relations with the Axis, and four remained neutral.
Placing the tariff in the service of wartime diplomacy helped deter
aggressors.

Doing so also deterred the communist threat during the Cold War. Just as
important as wartime liberalization was the postwar planning agenda
dealing with duties. The war prevented major concessions, slowing down
trade negotiations to a trickle. And protectionism did not disappear,
either during or in the decades after the war. But State Department
planners took Cordell Hull's vision of freer trade to the
conference table and fashioned multilateral agreements (with several
nations signing on under the unconditional MFN principle) designed to
reduce tariffs and other commercial barriers as a basis for peace and
stability. These more general ideological hopes changed once the Cold War
began and the policy of containment was instituted in the late 1940s,
first by economic means and then by military responses.